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State Law Exemption From Securities Registration

April 13, 2006

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When choosing a state in which to form your business entity, you need to weigh the relative advantages and disadvantages of the laws in certain states.

Unlike other states, Delaware expressly exempts from securities registration all limited liability company (LLC) interests that are not actually traded in a securities market, such as in a family LLC (see our discussion of securities issues in business formation).

This kind of flexibility is particularly advantageous when, in the manager-managed LLC, non-manager interests are to be issued.

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